Tower Semiconductor (NASDAQ:TSEM) is set to report first quarter earnings before the market opens Wednesday, with investors expected to focus closely on the company’s long-term growth outlook and management commentary around future capacity expansion.
Wedbush analysts wrote that they expect the Israel-based chipmaker to meet or exceed expectations for the quarter, noting that management has historically issued conservative guidance. The firm pointed to stronger-than-anticipated demand trends across the broader semiconductor industry during the first quarter, particularly among mature foundry peers that generally surpassed initial forecasts.
The analysts believe that Tower Semiconductor’s exposure to premium smartphone makers, including what they believe is significant exposure to Apple-related demand, may have helped offset concerns around weaker handset and radio-frequency markets. They also noted that improved revenue and product mix could support gross margin performance, in line with trends seen across other foundry companies this earnings season.
Attention is also turning toward the company’s second-quarter outlook. Wedbush said investor expectations for the period may remain muted after management previously emphasized that additional silicon photonics, or SiPh, capacity growth would be weighted toward the second half of 2026 and into 2027. However, the analysts said recent checks suggest some new SiPh programs may begin ramping in late first quarter and second quarter, potentially supporting stronger-than-expected near-term growth.
Outside of silicon photonics, Wedbush wrote that demand for power-related semiconductor products and premium handset applications appears to remain healthy. The firm also cited signs of accelerating transceiver and optical module demand tied to the transition toward 1.6-terabit networking technology, which it believes could benefit Tower Semiconductor through 2027.
Despite the constructive outlook, Wedbush cautioned that investor expectations have risen sharply following the company’s strong share performance since its fourth-quarter earnings report. The analysts said buy-side forecasts for 2026 and beyond now sit above broader Wall Street consensus estimates, raising the bar for the company’s results and outlook.
Investors are also expected to watch for any updates to Tower Semiconductor’s long-term financial model, including whether management accelerates its target timeline from 2028 into 2027 or incorporates additional capacity tied to its previously announced Ouzo expansion plans.
Wedbush maintained its $140 price target on the stock, noting that it was waiting for further clarity from management before revising longer-term estimates higher. The firm added that commentary around the company’s long-term targets is likely to be the key factor influencing the stock’s reaction following earnings.
Shares of Tower traded down about 5% at $218 on Tuesday afternoon, having surged about 450% so far this year.